Current Position Analysis The bond indenture for the 10-year, 8% debenture bonds dated January 2, 20Y8, required working capital of $1,602,900, a current ratio of 5.3, and a quick ratio of 3.1 at the end of each calendar year until the bonds mature. At December 31, 20Y9, the three measures were computed as follows: 1. Current assets: Cash Temporary investments Accounts receivable (net) Inventories Prepaid expenses Intangible assets Property, plant, and equipment Total current assets (net) Current liabilities: Accounts and short-term notes payable Accrued liabilities Total current liabilities Working capital 2. Current ratio 3. Quick ratio $204,000 255,000 408,000 323,000 85,000 51,000 918,000 $189,000 216,000 5.5 5.9 $2,244,000 (405,000) $1,839,000 $2,244,000 + $405,000 $1,122,000 + $189,000 a. There are errors in the calculation of the three measures of current position analysis. Determine the correct amounts. Round ratios to two decimal places. Total current assets (net) $2,244,000 Current liabilities: Accounts and short-term notes payable $189,000 Accrued liabilities 216,000 : Total current liabilities (405,000) Working capital $1,839,000 2. Current ratio 5.5 $2,244,000 + $405,000 3. Quick ratio 5.9 $1,122,000 + $189,000 a. There are errors in the calculation of the three measures of current position analysis. Determine the correct amounts. Round ratios to two decimal places. Working capital Current ratio Quick ratio DUE b. Based on the data, all of the following are true, regarding the bond indenture, except: \\I The company is in compliance with the requirements of the bond indenture, L l The company may need to renegotiate the bond contract. The bank may downgrade the company's bond rating. The bank may require the company to pay a higher interest rate on the bond. The bank may attach one or more restrictive covenants to the bond. ( Previous Next )